Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Dollar General Corp., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,431,523 – 7.44% × 26,309,034 = 473,298
Over the observed period, net operating profit after taxes (NOPAT) generally increased, though a recent decline is apparent. The cost of capital fluctuated modestly, while invested capital consistently rose. Consequently, economic profit demonstrated a positive trend for most of the period, peaking in 2023 before experiencing a substantial decrease in the most recent year.
- NOPAT Trend
- NOPAT increased from US$1,981,150 thousand in 2019 to US$2,145,885 thousand in 2020, representing a growth of approximately 8.3%. A significant increase was then observed, with NOPAT reaching US$3,105,494 thousand in 2021 and US$3,112,907 thousand in 2022. However, 2024 shows a considerable decrease to US$2,431,523 thousand, indicating a potential shift in operational performance.
- Cost of Capital
- The cost of capital experienced a slight increase from 7.81% in 2019 to 8.16% in 2022. It then decreased to 7.44% in 2024. These fluctuations, while present, were relatively contained and did not exhibit a strong directional trend.
- Invested Capital
- Invested capital consistently increased throughout the period, rising from US$18,107,408 thousand in 2019 to US$26,309,034 thousand in 2024. This represents a cumulative increase of approximately 45.3% over the six-year period, suggesting ongoing investment in the business.
- Economic Profit
- Economic profit mirrored the general trend of NOPAT, increasing from US$567,807 thousand in 2019 to a peak of US$1,731,512 thousand in 2023. However, a significant decline occurred in 2024, with economic profit falling to US$473,298 thousand. This decrease is attributable to the combined effect of the reduced NOPAT and the relatively stable cost of capital, despite the continued growth in invested capital.
The substantial decrease in economic profit in the most recent year warrants further investigation to determine the underlying causes and potential implications for future performance. While invested capital continues to grow, the decline in NOPAT suggests a potential need to evaluate operational efficiency and profitability.
Net Operating Profit after Taxes (NOPAT)
Dollar General Corp., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in LIFO reserve. See details »
3 Addition of increase (decrease) in equity equivalents to net income.
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 11,090,582 × 4.30% = 476,895
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 803,676 × 21.00% = 168,772
6 Addition of after taxes interest expense to net income.
The annual financial data indicates notable fluctuations in the profitability metrics over the presented periods.
- Net Income
-
Net income showed a consistent increase from February 1, 2019, through January 29, 2021, rising from approximately 1.59 billion US dollars to 2.65 billion US dollars. This upward trend indicates improved profitability during these years. However, in the subsequent years, net income declined, falling to about 2.40 billion US dollars by February 3, 2023, and further decreasing to approximately 1.66 billion US dollars by February 2, 2024. This decline in net income suggests challenges impacting profitability in the most recent years analyzed.
- Net Operating Profit After Taxes (NOPAT)
-
NOPAT similarly displayed an upward trajectory from February 1, 2019, through February 3, 2023. It grew from approximately 1.98 billion US dollars in 2019 to a peak of about 3.66 billion US dollars in 2023. This represents significant improvement in operating efficiency and profitability over this time frame. However, in the latest period ending February 2, 2024, NOPAT declined notably to around 2.43 billion US dollars, indicating a reduction in operating profitability despite the previous gains.
Overall, both net income and NOPAT exhibited substantial growth from 2019 through early 2023, reflecting enhanced financial performance and operational effectiveness. Nevertheless, the data for the most recent year reveals a marked decrease in these key profitability indicators, implying emerging issues or external factors affecting the company’s financial returns. Close monitoring and further analysis may be required to understand the drivers behind this downturn and to assess the company's future profitability prospects.
Cash Operating Taxes
Dollar General Corp., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
The data reflects trends in the provision for income taxes and cash operating taxes over a six-year period, from February 2019 to February 2024. Both financial items are presented in thousands of US dollars.
- Provision for Income Taxes
- The provision for income taxes displayed an overall upward trend between 2019 and 2023, beginning at 425,944 thousand US dollars in 2019 and peaking at 700,625 thousand US dollars in 2023. Specifically, the amount increased steadily from 2019 through 2021, reaching a high of 749,330 thousand US dollars in 2021. After this peak, the provision declined to 663,917 thousand US dollars in 2022, then rose slightly in 2023 before substantially decreasing to 458,245 thousand US dollars in 2024. This pattern suggests variability in tax expense recognition possibly influenced by changes in taxable income or tax planning strategies.
- Cash Operating Taxes
- Cash operating taxes also followed an increasing trend in the initial years, starting at 457,118 thousand US dollars in 2019 and reaching 823,390 thousand US dollars in 2021. This was followed by a decline in 2022 to 660,916 thousand US dollars and continued decreases through 2023 and 2024, reaching 596,198 thousand and 553,172 thousand US dollars respectively. The decline after 2021 indicates a reduction in actual cash outflows related to income taxes, which may correspond to changes in timing differences or tax provisions to cash payments.
- Comparative Insights
- Notably, cash operating taxes consistently exceed the provision for income taxes through 2021 but then fall below the provision in 2023 and 2024. This shift indicates a divergence between the tax expense recorded under accrual accounting (provision) and the cash paid for taxes, potentially due to deferred tax assets/liabilities or timing differences in tax payments. The peak of cash operating taxes in 2021, which is significantly higher than both preceding and subsequent years, may reflect a one-time tax payment or adjustment.
Overall, both the provision for income taxes and cash operating taxes exhibit peaks around 2021, followed by notable declines, with cash operating taxes showing a sharper descent. The divergence observed in recent years suggests evolving tax payment patterns and provision estimates that warrant closer examination for their implications on the company's tax strategy and cash flow management.
Invested Capital
Dollar General Corp., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of LIFO reserve. See details »
4 Addition of equity equivalents to shareholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
- Total Reported Debt & Leases
- The total reported debt and leases exhibit a consistent upward trend over the six-year period. Beginning at approximately $11.1 billion in early 2019, the figure increased steadily each year, reaching around $18.1 billion by early 2024. This represents an overall increase of roughly 63% from 2019 to 2024, with notable acceleration in growth between 2021 and 2023.
- Shareholders’ Equity
- Shareholders’ equity demonstrated moderate fluctuations with a slight downward trend until 2023, followed by a recovery in 2024. Initially valued at about $6.4 billion in 2019, it increased marginally in 2020 before decreasing progressively to a low of approximately $5.5 billion in early 2023. A rebound occurred in the final year to nearly $6.7 billion, almost recovering the equity levels observed at the beginning of the period.
- Invested Capital
- Invested capital showed a steady increase throughout the entire period. Starting at approximately $18.1 billion in 2019, it rose gradually each year, reaching about $26.3 billion by early 2024. This constitutes an increase of approximately 45% over six years, indicating continued investment and growth in capital base. The increases are consistent and without significant volatility.
- Overall Analysis
- The company appears to have increased its leverage significantly, as evidenced by the growing total reported debt and leases, which outpaced the growth in shareholders’ equity. Despite a temporary decline in equity through 2023, the final year saw a recovery to prior levels. The consistent rise in invested capital alongside increasing debt suggests an expansion strategy possibly funded by borrowing. The leverage position warrants monitoring due to the growing debt level relative to equity.
Cost of Capital
Dollar General Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 33,122,041) | 33,122,041) | ÷ | 51,068,786) | = | 0.65 | 0.65 | × | 9.60% | = | 6.23% | ||
| Long-term obligations, including current portion3 | 6,856,163) | 6,856,163) | ÷ | 51,068,786) | = | 0.13 | 0.13 | × | 4.49% × (1 – 21.00%) | = | 0.48% | ||
| Operating lease liability4 | 11,090,582) | 11,090,582) | ÷ | 51,068,786) | = | 0.22 | 0.22 | × | 4.30% × (1 – 21.00%) | = | 0.74% | ||
| Total: | 51,068,786) | 1.00 | 7.44% | ||||||||||
Based on: 10-K (reporting date: 2024-02-02).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 45,094,716) | 45,094,716) | ÷ | 62,672,927) | = | 0.72 | 0.72 | × | 9.60% | = | 6.91% | ||
| Long-term obligations, including current portion3 | 6,926,511) | 6,926,511) | ÷ | 62,672,927) | = | 0.11 | 0.11 | × | 4.25% × (1 – 21.00%) | = | 0.37% | ||
| Operating lease liability4 | 10,651,700) | 10,651,700) | ÷ | 62,672,927) | = | 0.17 | 0.17 | × | 3.90% × (1 – 21.00%) | = | 0.52% | ||
| Total: | 62,672,927) | 1.00 | 7.81% | ||||||||||
Based on: 10-K (reporting date: 2023-02-03).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 52,555,043) | 52,555,043) | ÷ | 67,072,297) | = | 0.78 | 0.78 | × | 9.60% | = | 7.53% | ||
| Long-term obligations, including current portion3 | 4,442,986) | 4,442,986) | ÷ | 67,072,297) | = | 0.07 | 0.07 | × | 3.74% × (1 – 21.00%) | = | 0.20% | ||
| Operating lease liability4 | 10,074,268) | 10,074,268) | ÷ | 67,072,297) | = | 0.15 | 0.15 | × | 3.70% × (1 – 21.00%) | = | 0.44% | ||
| Total: | 67,072,297) | 1.00 | 8.16% | ||||||||||
Based on: 10-K (reporting date: 2022-01-28).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 44,929,041) | 44,929,041) | ÷ | 59,094,767) | = | 0.76 | 0.76 | × | 9.60% | = | 7.30% | ||
| Long-term obligations, including current portion3 | 4,706,259) | 4,706,259) | ÷ | 59,094,767) | = | 0.08 | 0.08 | × | 3.74% × (1 – 21.00%) | = | 0.24% | ||
| Operating lease liability4 | 9,459,467) | 9,459,467) | ÷ | 59,094,767) | = | 0.16 | 0.16 | × | 3.90% × (1 – 21.00%) | = | 0.49% | ||
| Total: | 59,094,767) | 1.00 | 8.03% | ||||||||||
Based on: 10-K (reporting date: 2021-01-29).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 36,027,608) | 36,027,608) | ÷ | 47,954,115) | = | 0.75 | 0.75 | × | 9.60% | = | 7.22% | ||
| Long-term obligations, including current portion3 | 3,142,019) | 3,142,019) | ÷ | 47,954,115) | = | 0.07 | 0.07 | × | 3.46% × (1 – 21.00%) | = | 0.18% | ||
| Operating lease liability4 | 8,784,488) | 8,784,488) | ÷ | 47,954,115) | = | 0.18 | 0.18 | × | 4.20% × (1 – 21.00%) | = | 0.61% | ||
| Total: | 47,954,115) | 1.00 | 8.00% | ||||||||||
Based on: 10-K (reporting date: 2020-01-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 30,485,674) | 30,485,674) | ÷ | 41,575,960) | = | 0.73 | 0.73 | × | 9.60% | = | 7.04% | ||
| Long-term obligations, including current portion3 | 2,864,280) | 2,864,280) | ÷ | 41,575,960) | = | 0.07 | 0.07 | × | 3.62% × (1 – 21.00%) | = | 0.20% | ||
| Operating lease liability4 | 8,226,006) | 8,226,006) | ÷ | 41,575,960) | = | 0.20 | 0.20 | × | 3.62% × (1 – 21.00%) | = | 0.57% | ||
| Total: | 41,575,960) | 1.00 | 7.81% | ||||||||||
Based on: 10-K (reporting date: 2019-02-01).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Dollar General Corp., economic spread ratio calculation, comparison to benchmarks
| Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | Feb 1, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 473,298) | 1,731,512) | 1,358,421) | 1,427,356) | 615,306) | 567,807) | |
| Invested capital2 | 26,309,034) | 24,763,719) | 21,499,995) | 20,896,699) | 19,125,860) | 18,107,408) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 1.80% | 6.99% | 6.32% | 6.83% | 3.22% | 3.14% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Costco Wholesale Corp. | 6.69% | 1.88% | 5.96% | 4.37% | 0.60% | — | |
| Target Corp. | -0.87% | -2.64% | 10.11% | 0.62% | -0.58% | — | |
| Walmart Inc. | 1.21% | -1.21% | -0.67% | 0.79% | 0.93% | — | |
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 473,298 ÷ 26,309,034 = 1.80%
4 Click competitor name to see calculations.
The period between February 1, 2019, and February 2, 2024, demonstrates a fluctuating pattern in financial performance as indicated by economic profit and the economic spread ratio. Economic profit generally increased over the observed period, with a notable decline in the most recent year. Invested capital consistently increased throughout the period.
- Economic Profit
- Economic profit exhibited an upward trajectory from US$567,807 thousand in 2019 to US$615,306 thousand in 2020, representing modest growth. A significant increase was then observed, reaching US$1,427,356 thousand in 2021. While remaining substantial, economic profit decreased slightly to US$1,358,421 thousand in 2022 before rising again to US$1,731,512 thousand in 2023. However, a considerable decrease occurred in 2024, with economic profit falling to US$473,298 thousand.
- Invested Capital
- Invested capital showed a consistent upward trend throughout the period. Beginning at US$18,107,408 thousand in 2019, it increased to US$19,125,860 thousand in 2020, US$20,896,699 thousand in 2021, and US$21,499,995 thousand in 2022. This growth continued, reaching US$24,763,719 thousand in 2023 and further increasing to US$26,309,034 thousand in 2024.
- Economic Spread Ratio
- The economic spread ratio, representing the rate of return earned over the cost of capital, initially increased from 3.14% in 2019 to 3.22% in 2020. A substantial increase was then recorded, reaching 6.83% in 2021. The ratio remained high at 6.32% in 2022 and peaked at 6.99% in 2023. A significant decline was observed in 2024, with the economic spread ratio falling to 1.80%. This decrease coincides with the reduction in economic profit, despite the continued growth in invested capital.
The divergence between the increasing invested capital and the declining economic spread ratio in 2024 suggests a potential decrease in the efficiency with which capital is being utilized to generate economic profit. The substantial drop in economic profit in 2024, despite the continued increase in invested capital, warrants further investigation.
Economic Profit Margin
Dollar General Corp., economic profit margin calculation, comparison to benchmarks
| Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | Feb 1, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 473,298) | 1,731,512) | 1,358,421) | 1,427,356) | 615,306) | 567,807) | |
| Net sales | 38,691,609) | 37,844,863) | 34,220,449) | 33,746,839) | 27,753,973) | 25,625,043) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 1.22% | 4.58% | 3.97% | 4.23% | 2.22% | 2.22% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Costco Wholesale Corp. | 0.88% | 0.28% | 0.85% | 0.65% | 0.11% | — | |
| Target Corp. | -0.28% | -0.73% | 2.88% | 0.20% | -0.20% | — | |
| Walmart Inc. | 0.29% | -0.30% | -0.19% | 0.23% | 0.30% | — | |
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × 473,298 ÷ 38,691,609 = 1.22%
3 Click competitor name to see calculations.
The economic profit exhibited substantial fluctuation over the observed period. Initial values demonstrated consistent growth, peaking in 2023 before experiencing a significant decline in the most recent period. Simultaneously, net sales consistently increased year-over-year, though the rate of increase varied. The economic profit margin reflects these trends, showing a corresponding pattern of growth followed by a marked decrease.
- Economic Profit
- Economic profit increased from US$567,807 thousand in 2019 to US$615,306 thousand in 2020, representing modest growth. A substantial increase was then observed, with economic profit reaching US$1,427,356 thousand in 2021. This growth continued into 2023, reaching US$1,731,512 thousand, before declining sharply to US$473,298 thousand in 2024. This recent decrease represents a significant contraction in economic profit.
- Net Sales
- Net sales demonstrated a consistent upward trend throughout the period. From US$25,625,043 thousand in 2019, net sales grew to US$27,753,973 thousand in 2020. The rate of growth accelerated between 2020 and 2021, reaching US$33,746,839 thousand. Subsequent increases were recorded in 2022 and 2023, reaching US$34,220,449 thousand and US$37,844,863 thousand respectively. Net sales continued to increase in 2024, reaching US$38,691,609 thousand, although the rate of growth slowed compared to previous years.
- Economic Profit Margin
- The economic profit margin remained relatively stable at 2.22% in both 2019 and 2020. A substantial increase was then observed, with the margin rising to 4.23% in 2021. It decreased slightly to 3.97% in 2022, before increasing again to 4.58% in 2023. The most recent period, 2024, saw a significant decline in the economic profit margin to 1.22%, indicating a reduced ability to generate profit from sales despite continued revenue growth. This suggests a potential increase in costs or a decrease in pricing power.
The divergence between increasing net sales and decreasing economic profit margin in the latest period warrants further investigation. While revenue continues to grow, the company’s ability to translate those sales into economic profit has diminished considerably.